Inflation worries influence consumer behavior; how do companies respond?

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Several product categories have seen costs spike during the pandemic. While supply chains get plenty of well-deserved blame, there are more reasons than that.  These videos might provide an opening to discuss this topic in class. The Wall Street Journal video “The Surprising Ways Inflation is Hitting Diapers” (August 4, 2021), describes how diaper makers costs have risen – everything from raw materials to freight costs. In addition, changing demographics (fewer babies born) has the two big diaper companies raising prices to offset lower unit sales. The result has been an increase in diapers prices of 12% in the last year.

Along the same lines, coffee prices have also soared (up more than inflation over the last five years)– see another WSJ Video “Your Coffee Is Getting More Expensive. Here’s Why.” This article describes how shipping costs have contributed to those rising prices. Together, these articles can show your students how prices are influenced by demographic trends, raw material costs, and freight costs. And coffee (maybe diapers) are product categories students understand.

Seattle’s Zero-Emissions Last-Mile Delivery Hub

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Earlier this month, the United Nations’ Intergovernmental Panel on Climate Change issued its latest report on the climate. It was not encouraging and clearly points to the need for the world to limit carbon emissions. Many cities and businesses are stepping already trying to do just that.

One opportunity for lowering emissions is the so-called “last mile” for online retail. This is the delivery to customers’ homes and businesses. This is seen as lower hanging fruit. So the city of Seattle is experimenting with some low-cost options, including cargo bikes, electric vehicles and pallets, and food trucks. This opportunity is leading to some innovation around delivery.

This Fast Company article describes “Seattle’s new zero-emissions delivery hub is an experiment in slashing e-commerce emissions.” This video (also shown below) describes some of that innovation. In Essentials of Marketing, we discuss innovation as a benefit of marketing (Chapter 1) and as part of new product development (Chapter 9). And of course this topic is relevant to distribution (see chapters 10, 11, and 12) Our textbook also covers sustainability in chapters 1 and 19.

How the Pandemic is Changing Consumer Behavior…

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Over the last year, many of us have had conversations with our students about how the pandemic might permanently change consumer behavior. While the short-run changes (greater sales of Peloton bikes, more home projects – go Home Depot, and lower sales at restaurants and movie theaters, and of course no indoor concerts) are interesting, I think the fun stuff is thinking about which changes will stick. I like to use this topic as a way to get my students thinking. So I ask them, “Which pandemic changes in consumer behavior are likely to stick?” I often use this as a small group activity so they can chat with classmates.

After soliciting their ideas – and of course asking them “why?” I like to share with them what some of the so-called experts think. This article at McKinsey.com “The great consumer shift: Ten charts that show how US shopping behavior is changing” has lots of good stuff to share with your students — and here is another article. You can cut and paste some of the charts (data is good) into your PowerPoints and either confirm or supplement they ideas they come up with.

How Can Supply Chains Reduce Climate Change (#M4BW)

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As regular readers of this blog know, the recently published 17th edition of Essentials of Marketing includes several examples each chapter of companies, brands, or practices that demonstrate “Marketing for a Better World” (#M4BW). Marketing managers are not always looking to do the right thing for society — but many are finding ways to increase profits and make for a better world. This article “Supply Chains as a Game-Changer in the Fight Against Climate Change” (BCG, January 26, 2021) includes lots of practical advice you might share with your students.

Amazon’s advertising platform turns off customers…

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It seems like we talk about Amazon a lot here at Teach the 4 Ps. For several reasons Amazon is a great class example. First, it is a brand that everyone knows and most of our students use on a regular basis. Second, they are at the leading edge of so many new marketing practices. Third, Amazon offers the opportunity for examples that reflect many marketing practices (and many chapters). Today, we are talking about Amazon the online retailer, as an advertising medium. After Google and Facebook, Amazon is growing fast as an advertiser. A Wall Street Journal article earlier this year pointed out that “54% of people looking for a product now begin their search directly on Amazon…” Search advertising has traditionally been Google’s sweet spot.

This article, “Ad Business a Boon for Amazon But a Turn-Off for Shoppers,” (November 26, 2019) points out that Amazon may need to be careful with all the advertising. Some customers are getting annoyed with the online retailer for serving up too many ads. Customers just want the product they are looking for–but they often have to search through many “sponsored posts” before they get there.

This article or example may be used in your marketing classroom in a number of ways. If Amazon wants to do well by customers, is this the right way? Is this customer-oriented behavior (Chapter 1)? An interesting counter-example might be drawn out by asking students if they have ever gone to Amazon looking for one thing, then seeing an ad for a competing product, and ended up buying the competing product. Was that information useful?

The question gets further muddled when the article also notes that ads like this might help Amazon deliver one-day service that customers love (Chapters 10 and 12). It also suggests changes in consumer behavior (Chapter 5). And then of course the article highlights how Amazon is becoming a new advertising medium (Chapter 15). Lots to potentially talk about here.